Mortgage rates on June were rising steadily after weeks of decline and for the second time in a year, the rate reached its peak level. However, this month, we see mortgage rates on a steady decline offering a slight degree of relief to the would-be homebuyers. The 30- year fixed rate mortgage dropped to 4.52% from 4.55 percent a week earlier. In the five or six weeks that have passed, the mortgage rates for the 30-year fixed rate mortgage has been on the decline but in vast contrast, the average rate has increased from a year ago when it was stagnating at 3.96 percent.
The rise in the mortgage rates last in June followed a move by the Federal Reserve vote which prospected to raise the federal fund rate by 25 basis points. The run-up in the mortgage rates during the start of the year represented not just a rise in the risk free borrowing costs, but an opportune for investors as well, the mortgage spread also rose back to a more normal levels by 20 basis points. This for the buyers is good news and over the short term, there is room for the mortgage to decline.
Given that the economic expansion is its 10th year, you would expect that the residential single-family real estate would recover quickly, contrary to that, the recovery is slow and now, backed by demographics provided by the millennials reaching the peak age to buy their first home, moving forward, we expect a quick turnaround, the market will have a room to expand and grow.
The mortgage rates have declined as the investor in the United States bought the 10-year U.S Tresury notes causing a decline on the yields. The yield peaked in May reaching 3.11 percent but since then, the rates yields have dipped to 2.33 percent. Despite the decline, long term loan rates will remain near their highest levels in 7 years. The average 30-year mortgage rate reached their high levels this year of 4.66 percent which was on May 24. The 15-year rate hit 4.15 percent.